Due diligencein practice
Know your value chain, manage your risks
Anyone who manufactures, imports or trades is part of a value chain. Somewhere along that chain, people may be exploited, forests may disappear or CO₂ emissions may occur without you having direct visibility of them.
Supply chain responsibility starts from the principle that businesses are accountable for what happens across their value chain.
That responsibility is not new, but it is becoming increasingly tangible. European regulation is making it enforceable and visible. At the same time, customers, investors and financiers are asking more questions about supply chain risks.
If you do not understand your value chain, you expose your business to operational, financial and reputational risk.
Due diligence wordt vaak gezien als iets voor grote multinationals met een dedicated compliance-team. Dat klopt niet. De verplichtingen gelden breed, de indirecte druk via klanten en ketens is universeel, en een proportionele aanpak is voor elk bedrijf haalbaar — als je weet waar je moet beginnen.
Does this sound familiar?
- You know new legislation is coming, but lack a clear overview: which framework applies to which activities and what does that mean in practice?
- You import raw materials or semi-finished goods and wonder whether you will comply with the deforestation regulation.
- A major customer asks for insight into labour conditions at your suppliers, but you do not have the data available.
- A major customer requests traceability data to gain better insight into countries of origin.
- Your auditor asks how you manage climate-related risks across the value chain, but you do not yet have a documented approach.
- Internally, responsibility for supply chain due diligence sits somewhere between legal, procurement and sustainability.
Supply chain responsibility affects almost every business. Even if you are not directly subject to regulation, indirect pressure through customers and value chains is increasing.
A proportionate approach is achievable for every business – if you know where to start.
Discover how Pantarein can help you get started.
Which Europeanregulations impose due diligence obligations?
There is no single law governing supply chain responsibility. Some European frameworks require businesses to apply due diligence: systematically identifying, preventing and addressing human rights and environmental risks. Others impose compliance and transparency obligations that also require supply chain data and supplier coordination.
Each framework has its own scope, timeline and enforcement regime. Below are the five most relevant.
Corporate Sustainability Due Diligence Directive (CSDDD)
The Corporate Sustainability Due Diligence Directive (CSDDD) requires large companies to systematically identify, prevent and, where necessary, remediate human rights and environmental risks across their value chain.
The directive applies to EU companies with more than 5,000 employees and annual turnover above €1.5 billion. Member States have until 26 July 2027 to transpose it into national law, with application beginning in 2028.
Does your business fall below the thresholds? You may still be affected indirectly through customer requests and supply chain requirements.
What the CSDDD requires in practice:
- a risk-based approach;
- focus on direct suppliers and the most significant risks;
- demonstrable mitigation measures;
- contractual integration into supplier policies;
- documentation that stands up to external verification.
EU Deforestation Regulation (EUDR)
The EU Deforestation Regulation (EUDR) prohibits the import, export and sale within the European Union of seven commodities – cattle, timber, cocoa, coffee, palm oil, soy and rubber – and derived products unless they are demonstrably deforestation-free and produced in accordance with the laws of the country of origin.
Large and medium-sized operators must comply from 30 December 2026 onwards. Non-compliance may lead to fines, seizure of goods and temporary exclusion from the market.
What the EUDR requires in practice:
- traceability down to plot level;
- risk assessment by country of origin;
- an official Due Diligence Statement (DDS);
- documented mitigation measures.
Forced Labour Regulation (FLR)
The Forced Labour Regulation (FLR) prohibits products made using forced labour at any stage of the production process.
The regulation applies to all businesses placing products on the EU market or exporting them. Where non-compliance is identified, products may be stopped at the border or withdrawn from the market – even if your business was not directly involved. Implementation guidelines from the European Commission are expected by June 2026.
What the FLR requires in practice:
- insight into labour conditions at suppliers;
- risk-based prioritisation of sectors and countries;
- monitoring and documentation of identified signals.
Packaging and Packaging Waste Regulation (PPWR)
The PPWR introduces requirements on packaging design, recyclability and reuse.
Compliance requires supply chain data on material composition and component characteristics that often sit upstream with suppliers – making robust agreements on documentation and compliance essential.
Corporate Sustainability Reporting Directive (CSRD)
Businesses subject to the Corporate Sustainability Reporting Directive (CSRD) must quantify their Scope 3 emissions and collect supplier data to do so.
Even businesses that are not (yet) in scope increasingly receive requests from customers, investors and financiers that are subject to reporting obligations.
In addition, investors and major customers increasingly expect emissions reduction targets aligned with the Science Based Targets initiative (SBTi).
Builda workable supply chain approach in 4 steps
Regulatory frameworks differ, but the underlying logic remains the same: understand what happens in your value chain, take responsibility and act.
Start with supply chain transparency
You cannot take responsibility for what you do not understand. Start by mapping your value chain: who are your direct and indirect suppliers; which raw materials, materials and product categories are in scope; and which social, environmental, climate and compliance exposures are relevant to your business?
Prioritise where it matters
Not every supplier, product or regulatory framework requires the same level of attention. Identify where your business faces the greatest exposure and translate that analysis into a practical and supported approach.
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Integrate scope 3 emissions
Supply chain management is not only about human rights and deforestation. Your value chain’s carbon footprint is also a material dimension. A robust due diligence approach integrates scope 3 emissions into your overall approach and broader climate strategy.
Build and embed robust processes
Supply chain responsibility requires year-round processes:
- supplier engagement;
- supplier monitoring;
- periodic reassessment;
- internal reporting and audit-ready documentation.
Embed these processes into procurement, operations, finance and governance – and assess where software can support implementation.
Ready to take the next step in supply chain responsibility?
Whether you are just getting started or looking to strengthen an existing approach, we can help.
Pantarein supports organisations in building an integrated, workable and demonstrable supply chain approach – from value chain mapping and due diligence to compliance management, emissions calculation and process integration.
